The majority of financial services firms don’t expect an economic recovery to take place until 2010 or later, with 34% saying they expect a rebound sometime in the first six months of next year and 32% pointing to a future date, a survey of 125 companies by Ernst & Young found.

Seventy-two percent said they were surprised by the severity of the downturn, and 70% said they were surprised by its speed. Fifty percent said they have not seen any improvement in their business over the past 12 months, but 30% said they had.

Seventy percent also said they have changed their risk management strategy as a result of the crisis, 68% have altered their regulatory framework, and 54% have changed their operating model.

“The end of the recession is a tough one for any industry to call,” said E&Y partner Tom McGrath. “But financial services are naturally more cautious, and possibly more realistic, about when the return to profitability might happen.”

Carmine DiSibo, managing partner in the financial services practice, said, “The financial services industry has been battered but will certainly emerge from this recession stronger and healthier, with more focus on risk management.”

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